Outlook on 6 Indian banks, state-owned firms revised to positive, ratings affirmed

New Delhi: S&P Global Ratings on Wednesday revised outlook on six Indian banks, including SBI and ICICI Bank to positive from stable, mirroring the rating action on the sovereign. S&P also revised the rating outlook to positive from stable on state-owned NTPC, ONGC, and Power Grid and affirmed 'BBB-' issuer and issue ratings on these companies.

Earlier in the day, S&P revised the outlook on India to positive from stable; while affirming BBB- ratings. BBB- is the lowest investment grade rating. "Consequently, we revised the rating outlook on NTPC Ltd, Oil and Natural Gas Corp. Ltd. (ONGC), and Power Grid Corp. of India Ltd. to positive from stable. At the same time, we affirmed our 'BBB-' issuer and issue ratings on these companies," S&P said in a statement.

In a separate statement, S&P said it has revised its rating outlook on six Indian banks to positive from stable. It affirmed BBB- long-term and 'A-3' short-term ratings on Axis Bank, ICICI Bank, State Bank of India, HDFC Bank , Kotak Mahindra Bank and Indian Bank, and also affirmed the issue ratings on the banks. "At the same time, we have revised upward our assessment of the stand-alone credit profile (SACP) of Axis Bank and ICICI Bank by one notch each," it said.

S&P said India's good economic growth prospects will continue to support the asset quality of banks. Supportive structural and cyclical factors provide added benefits. "We project the banking sector's weak loans (including standard restructured advances) will decline to about 3 per cent of gross loans by March 31, 2025, from about 3.5 per cent as of March 31, 2024. This is on the back of healthy corporate balance sheets, tighter underwriting standards, and improved risk-management practices. "We believe underwriting standards for retail loans in India are healthy, and delinquencies in this segment remain manageable," S&P said.